PUTRAJAYA: Between 2021 and 2024, civil servants accounted for approximately 10 to 13% of new bankruptcy cases, says the Malaysian Department of Insolvency (MDI) director-general Datuk M. Bakri Abd Majid.
He expressed concern over the rising trend of bankruptcies among civil servants, noting that this increase contrasts with the overall decline in national bankruptcy statistics.
Based on MDI’s open data, he said the percentage of bankruptcies among public sector employees was 12% in 2020, 10% in 2021, 11% in 2022, 13% in 2023 and has already reached 14% in 2024.
“The inability of public servants to manage their finances effectively not only impacts them and their families but also has broader implications for the public service ecosystem,” he said in a statement on Monday (Sept 9).
He added that civil servants declared bankrupt could face disciplinary actions due to severe indebtedness, which damages the reputation of the public service. This situation may also hinder their chances for salary increments, promotions and eligibility for bonuses and financial assistance.
In some instances, civil servants have opted to declare bankruptcy to alleviate the prolonged stress of mounting debts.
From an administrative perspective, Bakri said department heads must monitor their staff’s financial health and remain alert to any behavioural changes.
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“Early preventive measures are crucial, including increasing activities focused on personal financial management.
“Departments should also consider collaborating with certified financial advisors or experts to address financial management issues,” he said, adding that failing to do so could open the door to corruption and misuse of power within departments.
Regarding the Public Service Remuneration System and the recent salary adjustments, he acknowledged that while these changes could provide some relief, there are still those who may exploit the situation by offering ‘bad loans’ to vulnerable staff members.
“This ‘vicious cycle’ must be stopped to prevent further financial instability among civil servants. The cooperation of all parties, particularly department heads, is crucial in addressing this issue.
“With the new salary scheme, public sector employees are expected to enhance their work practices and productivity. However, this also necessitates a shift in mindset,” he added. – Bernama
